Last Call: Colonial Bancgroup shares fall

Shares fell 23 cents, or 4 percent, to $5.76 in afternoon trading. Shares hit a year-low of $5.55 earlier in the session. The stock has fallen 78 percent from a high of $25.50 last July.

The decline follows a 6 percent drop on Tuesday after an analyst at FTN Midwest Securities Corp. downgraded the stock to "Neutral" from "Buy."

In a note to clients Wednesday, Morgan Keegan analyst Robert Patten lowered his full-year profit estimate to 40 cents per share from 52 cents per share, mainly due to expectations for higher provisioning expense over the next two quarters.

Analysts polled by Thomson Financial, on average, estimate earnings of 52 cents per share in fiscal 2008.

Despite an anticipated increase in credit costs over the next few quarters, Patten forecasts a profit in each of the next seven quarters at Colonial, and said much of the stock's recent under-performance has been driven more by investors' fears than facts.

"Management's decision to not participate in investor conferences and to refrain from making any public appearances continues to fuel speculation around the future credit losses and capital adequacy at Colonial," Patten said.

Colonial spokeswoman Marie Tolbert confirmed the company is not currently scheduling any conferences, but said it is meeting with shareholders.

Colonial now has sufficient capital to manage through the ongoing credit crisis following a public stock offering late last month, Patten said.

Colonial said it plans to use the $333 million in net proceeds from the stock offering for general corporate purposes, including investments in subsidiaries.